Deckers Outdoor wins proxy fight with Marcato

Activist hedge fund manager Marcato Capital Management lost its proxy battle against Deckers Outdoor Corp., despite the support of several large pension funds.

Not one of Marcato's three nominees was elected to Deckers' board of directors at the company's annual meeting Thursday. All nine directors nominated by Deckers, however, were re-elected, said a news release from the footwear maker Thursday. Exact vote tallies will be disclosed soon, a Deckers spokesman said.

In a Nov. 30 letter to Deckers stockholders, Mick McGuire, managing partner at Marcato, argued the company's board and management team had not been delivering on their goals. Specifically, Mr. McGuire asserted the company "has fallen further away from its own stated long-term margin goals; repeatedly missed annual earnings targets; wasted hundreds of millions of dollars of stockholders' capital through unwise capital-intensive retail expansion, overpriced acquisitions and excessive corporate (selling, general and administrative) and overhead costs; and seen its shares drastically underperform those of its peers."

Deckers officials argued in their own set of news releases that the company has been working on optimizing its retail strategy, improving its operating profits, refreshing its board and returning capital to stockholders. The company plans to add at least two independent directors ahead of its 2018 shareholder meeting.

On Dec. 6, two days after Marcato announced its reduced slate of nominees, proxy advisory firm Institutional Shareholder Services revised its recommendations to Deckers shareholders, urging them to vote for the nominees on Marcato's dissident card. When Marcato had 10 nominees, ISS recommended shareholders support three of them — Ms. Waterman, Mr. Fuller and Matthew Hepler — by withholding three director votes on Deckers' proxy card.

On the flip side, Glass Lewis and Egan-Jones Ratings Co., two other proxy advisory firms, recommended shareholders vote for all of Deckers' nominated directors, according to the company.

"We continue to believe that the status quo at Deckers is unacceptable and the board must take meaningful steps to avoid repeating its many historical failures," Mr. McGuire said in an emailed statement following Deckers' annual meeting. "We are pleased to have served as a positive change agent and believe our involvement has created significant value for all stockholders. However, a lot of work is still required in order for Deckers to reach its full potential."